Asian shares hesitant on China deflation risk, bank jitters
By Stella Qiu
SYDNEY (Reuters) — Asian shares were on the defensive on Wednesday after data showed that China slipped into deflation in July, a negative sign for the global growth outlook although it could serve as a damper on global inflationary forces.
European futures were up across the board, with EUROSTOXX 50 futures rising 0.8% and FTSE futures 0.5% higher, after Italy said its new tax on banks would not amount to more than 0.1% of total assets.
The MSCI's broadest index of Asia-Pacific shares outside Japan edged 0.4% higher after a 1.2% tumble a day earlier. Japan's Nikkei slipped 0.4%.
Closely watched China data on Wednesday showed consumer prices fell 0.3% in July from a year ago, the first decline since February 2021, although it was slightly better than the forecast of a 0.4% drop. Producer prices fell for a 10th consecutive month.
The data followed disappointing trade figures a day earlier that fuelled concerns about the global economic outlook.
China's blue chips eased 0.2% but Hong Kong's Hang Seng index reversed earlier losses and was up 0.2%. China's onshore yuan moved away from a three-week low to steady at 7.2143 per dollar.
Chinese property developers listed in Hong Kong dropped 0.4% after a 4.8% plunge a day earlier, as worries persisted about the sector, a major pillar of economic growth.
«I would say it is still a very soft report, underscoring the just very weak domestic demand in the Chinese economy… and I don't think that's going to disappear any time soon,» said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY).
«I think the Chinese government will have to do more in terms of policy stimulus in order to counter deflation risks.»
Kong added that fading base
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